Boeing awarded $17.4M for KC-135 engineering services, raising questions about competition and value
Contract Overview
Contract Amount: $17,368,033 ($17.4M)
Contractor: THE Boeing Company
Awarding Agency: Department of Defense
Start Date: 2020-04-01
End Date: 2025-03-28
Contract Duration: 1,822 days
Daily Burn Rate: $9.5K/day
Competition Type: NOT COMPETED
Pricing Type: COST PLUS FIXED FEE
Sector: Defense
Official Description: BOEING KC-135 ENGINEERING SERVICES
Place of Performance
Location: OKLAHOMA CITY, OKLAHOMA County, OKLAHOMA, 73135
State: Oklahoma Government Spending
Plain-Language Summary
Department of Defense obligated $17.4 million to THE BOEING COMPANY for work described as: BOEING KC-135 ENGINEERING SERVICES Key points: 1. Contract awarded on a sole-source basis, limiting price discovery and potentially increasing costs. 2. Significant duration of the contract (over 5 years) warrants close monitoring of performance and costs. 3. Engineering services are critical for maintaining aging aircraft, highlighting the importance of effective contract management. 4. The contract's cost-plus-fixed-fee structure may incentivize cost overruns if not managed tightly. 5. Lack of competition suggests potential reliance on a single vendor, impacting future market dynamics. 6. Performance and safety indicators are currently marked as 'OK', but require ongoing scrutiny.
Value Assessment
Rating: fair
Benchmarking the value of this specific engineering services contract is challenging due to its sole-source nature and specialized focus on the KC-135 fleet. Without competitive bids, it's difficult to ascertain if the fixed fee and estimated costs represent a fair market price. The duration of the contract also means that cost escalation over time needs careful management. However, the 'OK' status for performance and safety suggests that, to date, the contractor is meeting basic requirements.
Cost Per Unit: N/A
Competition Analysis
Competition Level: sole-source
This contract was awarded on a sole-source basis, meaning there was no open competition. The Department of Defense likely determined that only The Boeing Company possessed the unique capabilities, proprietary data, or existing infrastructure necessary to provide these specialized engineering services for the KC-135 aircraft. The absence of multiple bidders means that price discovery through market forces was bypassed, potentially leading to higher costs than if a competitive process had been employed.
Taxpayer Impact: Taxpayers may be paying a premium due to the lack of competition. Without bids from other qualified firms, there is less pressure on the incumbent contractor to offer the most cost-effective solution.
Public Impact
The U.S. Air Force benefits from continued engineering support for its KC-135 Stratotanker fleet, ensuring operational readiness. Essential engineering services are delivered to maintain the airworthiness and performance of critical aerial refueling and transport aircraft. The contract's impact is primarily national, supporting a key component of U.S. air mobility and strategic projection capabilities. The workforce implications are concentrated within The Boeing Company's engineering and technical divisions, particularly those with expertise in the KC-135 platform.
Waste & Efficiency Indicators
Waste Risk Score: 50 / 10
Warning Flags
- Sole-source award limits competitive pressure, potentially leading to higher costs for taxpayers.
- Cost-plus-fixed-fee contract structure requires robust oversight to prevent cost overruns.
- Long contract duration increases the risk of performance degradation or price creep over time.
- Reliance on a single contractor for specialized engineering could create vendor lock-in.
- Lack of transparency in the sole-source justification process can obscure potential alternatives.
Positive Signals
- Contract ensures continued engineering support for a vital legacy aircraft fleet.
- Boeing possesses unique institutional knowledge and technical data for the KC-135.
- Performance and safety metrics are currently rated as 'OK', indicating satisfactory execution thus far.
- The contract supports the operational readiness of a critical U.S. Air Force asset.
Sector Analysis
This contract falls within the aerospace and defense engineering services sector, a critical component of the broader defense industrial base. The market for specialized engineering support for legacy aircraft like the KC-135 is often concentrated among original equipment manufacturers or firms with deep historical knowledge. Spending on such services is essential for maintaining the operational readiness of aging military platforms, but the lack of competition can make it difficult to benchmark costs against broader industry trends. The total addressable market for sustainment engineering on such platforms can be substantial over the lifecycle of the aircraft.
Small Business Impact
This contract does not appear to involve small business set-asides, as indicated by the 'sb' field being false. The primary contractor is The Boeing Company, a large aerospace firm. There is no explicit information provided regarding subcontracting plans specifically for small businesses within this award. Therefore, the direct impact on the small business ecosystem from this particular contract is likely minimal, though Boeing's overall subcontracting practices could still involve small businesses on other programs.
Oversight & Accountability
Oversight for this contract is likely managed by the Defense Contract Management Agency (DCMA), given its role in contract administration for the Department of Defense. The contract type (Cost Plus Fixed Fee) necessitates close monitoring of costs and performance to ensure value for money and prevent contractor overruns. Accountability measures would include adherence to contract terms, delivery schedules, and performance standards. Transparency is generally limited for sole-source awards, but contract details and performance reports are typically available through federal procurement databases.
Related Government Programs
- KC-135 Stratotanker Sustainment
- Air Mobility Command Engineering Support
- DoD Aircraft Maintenance Contracts
- Aerospace Engineering Services
- Legacy Aircraft Support Programs
Risk Flags
- Sole-source award
- Cost-plus contract type
- Legacy aircraft sustainment
- Long contract duration
Tags
defense, department-of-defense, engineering-services, kc-135, boeing, sole-source, cost-plus-fixed-fee, aircraft-maintenance, legacy-aircraft, oklahoma, delivery-order, defense-contract-management-agency
Frequently Asked Questions
What is this federal contract paying for?
Department of Defense awarded $17.4 million to THE BOEING COMPANY. BOEING KC-135 ENGINEERING SERVICES
Who is the contractor on this award?
The obligated recipient is THE BOEING COMPANY.
Which agency awarded this contract?
Awarding agency: Department of Defense (Defense Contract Management Agency).
What is the total obligated amount?
The obligated amount is $17.4 million.
What is the period of performance?
Start: 2020-04-01. End: 2025-03-28.
What is Boeing's track record with providing engineering services for the KC-135 or similar legacy aircraft?
Boeing has a long-standing relationship with the U.S. Air Force and has been the primary manufacturer and sustainment provider for the KC-135 Stratotanker for decades. Their track record includes extensive experience in maintaining, upgrading, and providing engineering support for this specific aircraft platform. This deep institutional knowledge and historical involvement are often key factors cited in sole-source justifications for such specialized services. While specific performance metrics for past KC-135 engineering contracts are not detailed here, Boeing's overall role as the OEM suggests a comprehensive understanding of the aircraft's systems and potential issues. However, the 'OK' status on this current contract indicates satisfactory, but not necessarily exceptional, performance.
How does the $17.4 million value compare to similar engineering services contracts for legacy aircraft?
Directly comparing the $17.4 million value is difficult without knowing the specific scope of work, duration, and complexity of services provided. However, for specialized engineering services supporting aging military aircraft, this figure appears moderate. Contracts for comprehensive sustainment, depot-level maintenance, or major upgrade programs for similar platforms (e.g., C-130, B-52) can range from tens to hundreds of millions of dollars over their lifecycle. The value here is for engineering services specifically, not full operational sustainment. The sole-source nature means this figure isn't benchmarked against competitive bids, making a true value-for-money assessment challenging. It represents a significant investment in maintaining a critical capability.
What are the primary risks associated with a sole-source contract for critical engineering services?
The primary risks associated with a sole-source contract for critical engineering services include: 1) Higher Costs: Lack of competition removes downward price pressure, potentially leading to inflated prices compared to a competitive scenario. 2) Reduced Innovation: Without competitive pressure, the contractor may have less incentive to innovate or find more efficient solutions. 3) Vendor Lock-in: The government becomes dependent on a single provider, making it difficult and costly to switch even if performance or pricing becomes unsatisfactory. 4) Quality Concerns: While performance is currently 'OK', complacency can set in without the threat of losing business to a competitor. 5) Limited Transparency: The justification for sole-sourcing can sometimes obscure the true availability of alternative solutions or the rationale behind the chosen price.
How effective is the Cost Plus Fixed Fee (CPFF) contract type in managing costs for engineering services?
The Cost Plus Fixed Fee (CPFF) contract type aims to balance cost control with flexibility for complex projects where the final cost is uncertain. The government pays the contractor's actual allowable costs plus a predetermined fixed fee representing profit. This structure incentivizes the contractor to control costs, as the fee remains constant regardless of the final cost. However, it requires robust government oversight to ensure costs are reasonable and allowable. If oversight is weak, the contractor might not be sufficiently motivated to minimize costs, as the government bears the risk of cost overruns. For specialized engineering services, CPFF can be appropriate when the scope is not fully defined, but it necessitates diligent administration.
What are the historical spending patterns for KC-135 engineering support, and how does this contract fit?
Historical spending on KC-135 engineering support has been substantial, reflecting the aircraft's long service life (entering service in 1957) and its critical role in Air Mobility Command. Funding typically covers sustainment engineering, modifications, upgrades, and technical data management. This $17.4 million contract appears to be a component of the ongoing sustainment effort, likely covering a specific period (2020-2025) for essential engineering services. Previous awards for similar services would likely exist, potentially varying in value and scope depending on modernization efforts and fleet readiness needs. Without access to historical contract databases detailing specific KC-135 engineering awards, it's hard to place this precisely, but it aligns with the continuous need for support for such a legacy platform.
Industry Classification
NAICS: Professional, Scientific, and Technical Services › Architectural, Engineering, and Related Services › Engineering Services
Product/Service Code: SUPPORT SVCS (PROF, ADMIN, MGMT) › PROFESSIONAL SERVICES
Competition & Pricing
Extent Competed: NOT COMPETED
Solicitation Procedures: ONLY ONE SOURCE
Pricing Type: COST PLUS FIXED FEE (U)
Evaluated Preference: NONE
Contractor Details
Address: 6001 S AIR DEPOT BLVD, OKLAHOMA CITY, OK, 73135
Business Categories: Category Business, Corporate Entity Not Tax Exempt, Manufacturer of Goods, Not Designated a Small Business, Special Designations, U.S.-Owned Business
Financial Breakdown
Contract Ceiling: $114,093,059
Exercised Options: $114,093,059
Current Obligation: $17,368,033
Subaward Activity
Number of Subawards: 1
Total Subaward Amount: $40,094
Contract Characteristics
Commercial Item: COMMERCIAL PRODUCTS/SERVICES PROCEDURES NOT USED
Cost or Pricing Data: YES
Parent Contract
Parent Award PIID: FA810516D0002
IDV Type: IDC
Timeline
Start Date: 2020-04-01
Current End Date: 2025-03-28
Potential End Date: 2025-03-28 00:00:00
Last Modified: 2025-03-28
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